Doubts rise over Tesla as April sales tumble

Tesla saw its Chinese sales slump in April following its controversial handling of customer complaints, raising concerns over the US electric carmaker's prospects in the world's largest vehicle market.

A total of 25,845 Model 3 sedans and Model Y crossovers were delivered last month, down around 27 percent from March, according to China Passenger Car Association data released on Wednesday.

This has caused speculation that Tesla is suffering from a backlash of its tough stance and response to a woman who complained about a brake failure at its booth at the Shanghai auto show in late April.

Security guards dragged her away and a senior Tesla executive accused her of a plot.

The incident caused outrage against the brand that was deemed one of the best electric carmakers. The backlash is still raging on China's social media despite Tesla apologizing.

In a statement to China Daily, Tesla said the sales fall was primarily due to a two-week production halt to update its manufacturing equipment at its Shanghai plant.

The plant also produces vehicles for export. Statistics from the CPCA showed that Tesla exported around 14,000 of the 25,845 vehicles sold in April.

Tesla did not give an estimate whether its sales would rebound to levels in March, which saw 35,000 vehicles delivered in the country. But orders of its Chinese-made Model Y will not be delivered until July.

Tesla sold more than 95,000 vehicles in the first four months in China. But sales in January and February combined were around 33,000, which was lower than its sales in March.

A source close to Tesla told China Daily that the repercussions of Tesla's incident at the Shanghai auto show would not be felt in the month it happened.

"Clearly the impact will be on sales in May, if there is any," said the person who declined to be named.

In a separate development, Reuters reported Tesla is suspending its plan to expand its Shanghai plant.

Tesla refrained from bidding in March on a plot of land across the road from the plant. It no longer aims to boost Chinese production capacity significantly, at least for now, citing three people with knowledge of the matter.

"Tesla Shanghai factory is developing as planned. It is progressing but there is nothing to disclose at this stage," said Tesla in a statement to China Daily on Thursday.

Tesla's Shanghai factory is designed to make up to 500,000 cars per year. It has the capacity to produce Model 3 and Model Y vehicles at a rate of 450,000 total units per year.

The firm faces intensifying competition in China with traditional carmakers including Volkswagen and Chinese startups such as Nio.

Reuters said Nio is considering making mass-market products under another marque.

Analysts said Tesla should tread its path more carefully in the Chinese market and show respect to its customers, which should be the golden rule for any business.